BRUSSELS — When cocoa farmer Leticia Yankey came to Brussels last October, she had a simple message for the EU: Think about the mess your simplification agenda is creating for companies and communities. It was just weeks after the European Commission said it might delay the EU’s anti-deforestation law, which requires companies to prove the goods they import into the region are not produced on deforested land, for the second time. But in Yankey’s Ghana, cocoa farmers were ready for the rules, known as the EU Deforestation Regulation or EUDR, to kick in. “How are we going to be taken serious the next time we move to our communities, our farmers, and even the [Licensed Buying Companies] to tell them that EUDR is … coming back?” Yankey asked.  Since then, the Commission has kept making changes to the plan. First by floating the delay, then backtracking but proposing tweaks to the law — only for EU governments and lawmakers to reinstate the postponement, pile on additional carve-outs and then leave open the door for further changes in the spring. All within three months. It’s not just smaller companies and remote communities that are rankled by the EU’s will-they-won’t-they approach to lawmaking. Bart Vandewaetere, a VP for government relations and ESG engagement at Nestlé, says that when he reports on European legislative developments to the company board, they “[look] a little bit at me like: ‘Okay, what’s next? Will you come next week with something else, or do we need to implement it this way, or we wait?’” Since the start of Ursula von der Leyen’s second term as European Commission President, the EU has been rolling back dozens of rules in a bid to make it easier for businesses to make money and create jobs.   Encouraged by EU leaders to hack back regulations quickly and without fuss, the Commission presented 10 simplification packages last year — on top of its plan to loosen the anti-deforestation law — to water down rules in the agricultural, environment, tech, defense and automotive sectors as well as on access to EU funding. COMPLICATION AGENDA Brussels says it is answering the wishes of business for less paperwork and fewer legislative constraints, which companies claim prevent them from competing with their U.S. and Chinese rivals. It also promises billions in savings as a result. “We will accelerate the work, as a matter of utmost priority, on all proposals with a simplification and competitiveness dimension,” the EU institutions wrote this month in a joint declaration of priorities for the year ahead. The ones who got ready to implement the laws already even go as far as to say the EU is losing one of its key appeals: being a regulatory powerhouse with policies that encourage companies to transition towards more sustainable business models. | Nicolas Economou/NurPhoto via Getty Images But for many businesses, the frequent introduction, pausing and rewriting of EU rules is, just making life more complicated. “What we constantly hear from clients is that regulatory uncertainty makes it difficult to plan ahead,” said Thomas Delille, a partner at global law firm Squire Patton Boggs, even though they generally support the simplification agenda. The ones who got ready to implement the laws already even go as far as to say the EU is losing one of its key appeals: being a regulatory powerhouse with policies that encourage companies to transition towards more sustainable business models. “The European Union unfortunately has lost some trust in the boardrooms by making simplifications that are maybe undermining predictability,” said Nestlé’s Vandewaetere. The risk is that the EU will shoot itself in the foot by making it harder for companies to invest in the region, which is essential for competitiveness.  “This approach rewards the laggards,” said Tsvetelina Kuzmanova, senior project manager as the Cambridge Institute for Sustainability Leadership, adding that it “lowers expectations at the very moment when companies need clarity and policy stability to invest.” INEVITABLE TURBULENCE Many of Europe’s decision-makers are convinced that undoing business rules is a necessary step in boosting economic growth.  The simplification measures “were needed and they are needed,” said Danish Environment Minister Magnus Heunicke, confirming that he believes the EU regulatory environment is clearer now for businesses than it was a year ago. Denmark, which held the rotating presidency of the Council of the EU for the last six months, had led much of the negotiations on the simplification packages, or “omnibuses” in Brussels parlance. Brussels is also receiving as many calls from businesses to speed up its deregulation drive as those urging caution. For example, European agriculture and food chain lobbies like Copa-Cogeca and FoodDrink Europe said in a joint appeal that the EU should “address the regulatory, administrative, legal, practical and reporting burdens that agri-food operators are facing.” These, they added, are major obstacles to investing in sustainability and productivity. Successive omnibus packages should, meanwhile, be “proposed whenever necessary.” But undoing laws requires as much work and time as drafting them. Over the past year, lawmakers and EU governments have been enthralled in deeply political negotiations over these packages. Entire teams of diplomats, elected officials, assistants, translators and legal experts have been mobilized to argue over technical detail that many were engaged in drafting just a couple of years earlier.   Of the 10 omnibus proposals, three have already been finalized. The EU has also paused the implementation of the rules it’s currently reviewing so that companies don’t have to comply while the process is ongoing. “If you look at this from an industry perspective, there will be some turbulence before there is simplification, it’s inevitable,” said Gerard McElwee, another partner at Squire Patton Boggs.  Ironically, the EU has also faced criticism for making cuts too quickly — particularly to rules on environmental protection — and without properly studying the effect they would have on Europe’s economy and communities. Yankey, the cocoa farmer, said she understands the Commission’s quandary. “They just want to listen to both sides,” she said. “Somebody is ready, somebody is not ready.” But her community will need more EU support to help understand and adapt to legislative tweaks that impact them. The constant changes do not “help us to build confidence in the rules or the game that we are playing,” she said.

BRUSSELS — When the colonial governments of Belgium and Portugal ordered the construction of a railway connecting oil- and mineral-rich regions in the African interior to the Atlantic, their primary objective was to plunder resources such as rubber, ivory and minerals for export to Western countries.  Today, that same stretch of railway infrastructure, snaking through Zambia, the Democratic Republic of Congo and Angola to the port of Lobito, is being modernized and extended with U.S. and EU money to facilitate the transport of sought-after minerals like cobalt and copper. Just this month, Jozef Síkela, the EU commissioner for international partnerships, signed a €116 million investment package for the corridor, often hailed as a model initiative under Global Gateway, the bloc’s infrastructure development program. This time around, however, Brussels says it’s committed to resetting its historically tainted relationship with the region — a message European Commission President Ursula von der Leyen and European Council President António Costa will stress when they address African and EU leaders at a Nov. 24-25 summit in Luanda, Angola, which is this year celebrating 50 years of independence from Portuguese rule.  “Global Gateway is about mutual benefits,” von der Leyen said in a keynote speech in October. The program should “focus even more on key value chains,” including the metals and minerals needed in everything from smartphones to wind turbines and defense applications.  The aim, she said, is to “build up resilient value chains together. With local infrastructure, but also local jobs, local skills and local industries.”  Yet Brussels is scrambling to enter a region only to find that China got there first. Batches of copper sheets are stored in a warehouse and wait to be loaded on trucks in Zambia. | Per-Anders Pettersson/Getty Images African countries are already the primary suppliers of minerals to Beijing, which has secured access to their resource wealth — unhindered by any historical baggage of colonial exploitation — and is now the world’s dominant processor. Europe’s emphasis on retaining economic value in host countries — rather than merely extracting resources for export — answers calls by African leaders for a more equitable and sustainable approach to developing their countries’ natural resources.  “The EU has been quite vocal, since the beginning of the raw minerals diplomacy two years ago, saying: We want to be the ethical partner,” said Martina Matarazzo, international and EU advocacy coordinator at Resource Matters, a Belgian NGO focusing on resource extraction, which also has an office in Kinshasa, DRC.  But “there is a big gap” between what’s being said and what’s being done, she added, pointing out that it is still unclear how the Lobito Corridor can be a “win-win” project, rather than just facilitating the shipping of minerals abroad.  Brussels finds itself under growing pressure to diversify its supply chains of lithium, rare earths and other raw materials away from China — which has demonstrated time and again it is ready to weaponize its market dominance. To that end, it is drafting a new plan, due on Dec. 3, to accelerate the bloc’s diversification efforts.   In African countries, however, Brussels is still struggling to establish itself as an attractive, ethical alternative to Beijing, which has long secured vast access to the continent’s resources through large-scale investments in mining, processing and infrastructure.  To enter the minerals space, the EU needs to walk the talk in close cooperation with African leaders — doing so may be its only chance to secure resources while moving away from its extractivist past, POLITICO has found in conversations with researchers, policymakers and civil society.  RESOURCE RUSH Appetite for Africa’s vast natural riches first drew colonizers to the continent — and laid “the foundation for post-independence resource dependency and external interference,” according to the Africa Policy Research Institute. Now, the continent’s deposits of vital minerals have turned it into a strategic player, with Zambian President Hakainde Hichilema last year setting a goal of tripling copper output by the end of the decade, for instance. Beijing has often used Belt and Road, its international development initiative, to secure mining rights in exchange for infrastructure projects. Washington, which lags far behind Beijing, is also stepping up its game, with investments into Africa quietly overtaking China’s. President Donald Trump has extended the U.S. security umbrella to war-torn areas in exchange for access to resources, for example brokering a — shaky — peace deal between Rwanda and the DRC. EU companies are “really trying to catch up,” said Christian Géraud Neema Byamungu, an expert on China-Africa relations and the Francophone Africa editor of the China Global South Project. “They left Africa when there was a sense that Africa is not really a place to do business.” DOING THINGS DIFFERENTLY Against this backdrop, the key question for the EU is: What can it offer to set itself apart from other partners? On paper, the answer is clear: a responsible approach to resource extraction that prioritizes creating local economic value, along with high environmental and social standards.  “We want to focus on the sustainable development of value chains and how to work with our African partners to support their rise of the value chains,” said an EU official ahead of the Luanda summit, where minerals will be a key topic. “This is not about extraction only,” they added. But so far, that still has to translate into a concrete impact on the ground. “We are not at the point where we can see how really the EU is trying to change things on the ground in terms of value addition in DRC,” said Emmanuel Umpula Nkumba, executive director of NGO Afrewatch. “I am not naïve, they are coming to make money, not to help us,” he added.  Not only has offtake from the Lobito Corridor been slow, but the project has also come under fire for prioritizing Western interests over African development and agency, and for potentially leading to the destruction of local forests, community displacement and an overall lack of benefits for local populations.  The 2024 Lobito Corridor Trans-Africa Summit | Andrew Caballero-Reynolds/AFP via Getty Images The EU, however, views the corridor as “a symbol of the partnership between the African and European continent and an example of our shared investment agenda,” according to a Commission spokesperson, who called it “a lifeline towards sustainable development and shared prosperity.” Finally, while “value addition” has become a catchphrase, it’s unclear whether EU and African leaders see eye to eye on what the term means.  African industry representatives and officials often point to building a domestic supply chain up to the final product. EU officials, by contrast, tend to envision refining minerals in the country of origin and then exporting them, according to a report published by the European Council on Foreign Relations. A SUSTAINABLE BUSINESS CASE? The second component of the EU’s approach — strong sustainability and human rights safeguards — faces major trouble, not least in the name of making the EU more competitive.  In Brussels, proposed rules that would require companies to police their supply chains for environmental harm and human rights violations are dying a slow death, as conservative politicians channel complaints from businesses that they can’t bear the cost of complying. An investigation by the Business & Human Rights Resource Centre of the 13 mining, refining and recycling projects outside the bloc labeled “strategic” by the EU executive — including four in Africa — identified “an inconsistent approach to key human rights policies.”  However, under pressure from African leaders, stricter safeguards are slowly becoming more important in the sector: “high [environmental, social and governance] standards” are a core component of the African Union’s mining strategy published in 2024.  The Chinese, too, are adapting quickly.  “China’s also getting good with standards,” said Sarah Logan, a visiting fellow at the European Council on Foreign Relations who co-authored the assessment of African and European interpretations of value addition. “If they are made to, Chinese mining companies are very capable of adhering to ESG standards.”  Therefore, besides massively scaling up investment, the EU and European companies will need to turn their promise of being a reliable and ethical partner into reality — sooner rather than later. “The only way to distinguish ourselves from the Chinese is to guarantee these benefits for communities,” Spanish Green European lawmaker Ana Miranda Paz told a panel discussion on the Lobito Corridor in Brussels. This story has been updated with comment from the European Commission.

With the European Green Deal and the Clean Industrial Deal, the EU set a clear course for the economic transition, serving Europe’s strategic interests of competitiveness and growth while also tackling climate change. For the EU to reach its industrial decarbonization and competitiveness objectives, the Draghi report identifies an annual investment gap of up to €800 billion. High-quality, reliable and comparable corporate disclosures, including on sustainability risks and impacts, are key to inform investment decisions and channel financing for the transition. EU rules on corporate sustainability reporting have been expected to fill the existing data gap. While simplification as such is a helpful aim, it looks like the Omnibus initiative is going too far. With the current direction of travel, confirmed by the Council in its agreement on 24 June, the Omnibus is likely to severely hinder the availability of comparable environmental, social and governance (ESG) data, which investors need to scale up investment for industrial decarbonization and sustainable growth, thus impairing their capacity to support the just transition. > The Omnibus is likely to severely hinder the availability of comparable > environmental, social and governance (ESG) data, which investors need to scale > up investment for industrial decarbonization and sustainable growth. The European Commission introduced the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD) and the EU Taxonomy to respond to real needs, voiced over the years by investors and businesses alike. These rules were intended to close the ESG data gap, bring clarity and structure to the disclosures needed to allocate capital effectively for a just transition, and foster long-term value creation. These frameworks were not meant as ‘tick-box compliance exercises’, but as practical tools, designed to inform capital allocation, and better manage risks and opportunities. Now, the Omnibus proposal risks steering these rules of course. Although investors have repeatedly shown support for maintaining these rules and their fundamentals, we are now witnessing a broad-scale weakening of their core substance. Far from delivering clarity, the Omnibus initiative introduces uncertainty, penalizes first movers, who are likely to face higher costs due to adjusting the systems they put in place, and undermines the foundations of Europe’s sustainable finance architecture at a time when certainty is most needed to scale up investment for a just transition to a low-carbon economy. THE COST OF DOWNGRADING SUSTAINABILITY DATA The EU’s reporting framework is a critical enabler of investor confidence, for them to support the clean transition, and resilience building of our economy. It aims to replace a fragmented patchwork of voluntary disclosures with reliable, comparable data, giving both companies and investors the clarity they need to navigate the future. Let’s be clear: streamlining corporate reporting is a goal that is shared by investors and businesses alike. But simplification must be smart: by cutting duplications, not cutting corners. The Omnibus is likely to result in excluding up to 90 percent of companies from the scope of CSRD and EU Taxonomy reporting, if not more, should the council’s position, which includes a €450 million turnover threshold, be retained. This would significantly restrict the availability of reliable data that investors need to make investment decisions, manage risks, identify opportunities and comply with their own legal requirements. Voluntary reporting is unlikely to bridge this data gap, both in terms of the number of companies that will effectively report and regarding the quality of information reported. Using basic, voluntary questionnaires that were designed for very small entities would result in piecemeal disclosures, downgrading data quality, comparability and reliability. Market feedback has already demonstrated that it is necessary to go beyond voluntary reporting to avoid these shortcomings. This is precisely why EU regulators designed the CSRD in the first place. As a result of the Omnibus initiative, investors will likely focus on a limited number of investee companies that are in scope of CSRD and provide reliable information — limiting the financing opportunities for smaller, out-of-scope companies, including mid-caps. This will also restrict the offer and diversity of sustainable financial products — despite the clear appetite of end investors, including EU citizens, for these investments. This runs counter to the objectives of scaling-up sustainable growth laid down in the Clean Industrial Deal, and of mobilizing retail savings to help bridge the EU’s investment gap as proposed in the Savings and Investments Union. CUTTING DUE DILIGENCE BLINDS INVESTORS The CSDDD is also facing significant risks in the current institutional discussions. Originally, the introduction of a meaningful framework to help companies identify, prevent and address serious human rights and environmental risks across their value chains marked an important step to accelerate the just transition to industrial decarbonization and sustainable value creation. For investors, the CSDDD provides a structured approach that improves transparency and enables a more accurate assessment of material environmental and human rights risks across portfolios. This fills long     standing gaps in due diligence data and supports better-informed decisions. In addition, the CSDDD provisions to adopt and implement corporate transition plans including science-based climate targets, in line with CSRD disclosures, are providing an essential forward-looking tool for investors to support industrial decarbonization, consistent with the EU’s Clean Industrial Deal’s objectives. By limiting due diligence obligations to direct suppliers (so-called Tier 1), the Omnibus proposal risks turning the directive into a compliance formality, diminishing its value for businesses and investors alike. The original CSDDD got the fundamentals right: it allowed companies to focus on the most salient risks across their entire value chain where harm is most likely to occur. A supplier-based model would miss precisely the meaningful information and material risks that investors need visibility on. It would also diverge from widely adopted international standards such as the OECD guidelines for Multinational Companies and the UN Guiding Principles. The requirement for companies to adopt and implement their climate transition plans is also at risk, being seen as overly stringent. However, the obligation to adopt and act on transition plans was designed as an obligation of means, not results, giving businesses flexibility while providing investors with a clearer view of corporate alignment with climate targets. Watering down or downright removing these provisions could effectively turn transition plans into paperwork with no follow-through and negatively impact the trust that investors can put in corporate decarbonization pledges. Additionally, the council proposal to set the CSDDD threshold to companies above 5,000 employees, if adopted, will result in fewer than 1,000 companies from a few EU member states being covered. Weakening the CSDDD would add confusion and leave companies and investors navigating a patchwork of diverging legal interpretations across member states. A SMARTER PATH TO SIMPLIFICATION IS NEEDED How the EU handles this moment will speak volumes. Over the past decade, the EU has become a global reference point in sustainable finance, shaping policies and practices worldwide. This is proof that competitiveness and sustainability can reinforce, not contradict, one another. But that leadership is now at risk. > How the EU handles this moment will speak volumes. Over the past decade, the > EU has become a global reference point in sustainable finance, shaping > policies and practices worldwide. The position taken by the council last week does not address some of the major concerns from investors highlighted above and would lead to even more fragmentation in reporting and due diligence requirements across companies and member states. While the window for change is narrowing, the European Parliament retains the capacity to steer policy back on track. The recipe for success and striking the right balance between stakeholders’ concerns is to streamline rules while preserving what makes Europe’s sustainability framework effective, workable and credible, across both sustainability reporting and due diligence. Simplify where it adds value, but don’t dismantle the tools that investors rely on to assess risk, allocate capital and support the transition. What the market needs now is not another reset, but consistency, continuity and stable implementation: technical adjustments, clear guidance, proportionate regimes and legal stability. The EU must stand by the rules it has put in place, not pull the rug out from under those using them to finance Europe’s future. --------------------------------------------------------------------------------